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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 374.27-0.2%Nov 21 4:00 PM EST
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To: 2MAR$ who wrote (85307)12/30/2011 6:02:34 AM
From: TobagoJack  Read Replies (3) of 217984
 
just in in-tray, per greed n fear

· It does not look as if the so-called “presidential cycle” is going to work as well as normal for the US stock market this year. Still in GREED & fear’s view the US stock market has done remarkably well in 2011 given where the 10-year Treasury bond yield is trading. This performance is due to the relative weakness of the US dollar throughout the year and the S&P500’s gearing to overseas revenues.

· A big risk for the US stock market in the coming year would be a big rally in the US dollar triggered by a major euro sell off. With the new ECB boss saying one thing and doing another, the risks to the euro are now growing.

· As for the Eurozone crisis, the ECB’s three-year loan facility for European banks has bought some time and helped defer a Lehman moment. ButGREED & fear remains content to maintain the recommended hedge of being short European financials going into 2012.

· Iran threatened this week to block all oil shipments through the Strait of Hormuz if the US moves ahead with Congressionally-mandated sanctions intended to reduce dramatically Iran’s oil revenue. The threatened sanctions risk doing real damage to Iran, as is suggested by the 15% depreciation so far this month in the value of the Iranian currency.

· The Iran nuclear issue has been heating up again in recent months. While it is also the case that President Barack Obama will, for domestic political reasons, have to be more sensitive to Israel’s concerns in a presidential election year.

· The latest concerns over Iran have also served only to complicate still further the increasingly confusing state of Middle East politics. What appears to have happened is that secular regimes have been replaced by Islamic regimes, whose respect for Western values are ambivalent at best.

· For now newsflow from Iran still has the potential to trigger an oil spike. Such a spike will provide an opportunity to go short oil given the underlying macro fundamentals. But that will not prevent the damage done to risk appetites.

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